Statistics show that today’s physicians are leaving their programs having accumulated an average debt amount of just under $200,000 plus an additional $25,000 in undergraduate student loan debt they carried over from previous programs. These statistics fall in line with the majority of physicians we work with if not even still on the low end. An overwhelming number of physicians we speak to, who are very concerned about their debt levels, have student loan debt between $200,000 and $500,000. Coming up with a strategy for repaying this debt in the most efficient manner is critically important to physicians’ long-term financial success.
Physicians have many questions about their student loan repayment options. “Is moving to an income-based plan best for me? Should I work for a non-profit and go for Public Service Loan Forgiveness? Should I refinance my loans?” This is what we hear most often.
Most physicians are looking for the route most traveled. They want to know what their peers are doing and follow in their footsteps. However, forming a student loan repayment strategy is not a one-size-fits-all process. What works well for a friend or colleague may not be an effective strategy for you.
Your age, marital status, age of children, employer, practicing area of specialty, earning potential and other financial goals are all factors (just to name a few). Additionally, the repayment options continue to morph as public policy changes, refinancing options change, interest rates change, and public outcry for relief builds. The student loan landscape continues to change, and navigating it can be a challenging task.
When evaluating different repayment strategies, here are some things to consider:
- Will you be practicing at a for-profit or non-profit organization? Public Service Loan Forgiveness is a hot issue, but as long as it remains a viable option, it is one worth considering for physicians with substantial student loan debt. Many physicians complete their residencies and fellowships at non-profit hospitals. If they were paying their loans during that time, they may already be 5-7 years into the 10-year loan forgiveness process.
- Are there loan repayment assistance programs available to you? The National Institutes of Health (NIH) repays up to $35,000 per year of student loans if you agree to conduct medical research in needed fields. The National Health Service Corps (NHSC) offers tax-free loan repayment assistance of up to $50,000 for a 2-year commitment to qualified health care providers who choose to take their skills to geographic areas with inadequate medical care. Additionally, most individual states have loan repayment assistance programs for physicians who practice in their state facilities.
- Is refinancing a viable option? If you practice medicine at a for-profit company, like many private practices are, refinancing is worth exploring. Refinancing can dramatically reduce your interest rates and monthly payments. The lower interest rate may result in paying less over the lifetime of the loan. However, rates are often determined by a combination of credit score and income. Refinancing may also free up enough monthly funds that can be used to save other important financial goals.
Everyone’s situation is unique, and many factors influence which repayment strategy is best. Consult your financial professional to determine which student loan repayment strategy fits your needs best.
Jeff Witz, CFP® and David Zemon welcome readers’ questions. They can be reached at 800-883-8555 or at firstname.lastname@example.org or email@example.com.
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Securities offered through and Registered Representatives of Ausdal Financial Partners, Inc. Member FINRA/SIPC 5187 Utica Ridge Rd ∙ Davenport, IA 52807 ∙ 563-326-2064
MEDIQUS Asset Advisors and Ausdal Financial Partners, Inc. are independently owned and operated. The opinions expressed in this article are those of the author and are not necessarily the same as those of Ausdal Financial Partners.